International data roaming is broken. Can MVNOs fix it?

Let’s face it: if you use your phone or tablet’s mobile Internet connection while travelling abroad, well, you’re screwed. Standard roaming rates for most operators can run upwards of $20 a megabyte. Some carriers will sell you a bucket of megabytes, but the going rates are still 10 to 20 times higher than what you’d typically pay for mobile data on a standard plan.

If you’re lucky enough to have an unlocked phone with GSM and HSPA radios, you can buy another carrier’s SIM card service when you arrive at your destination and pay local rates. If you’re really determined, you could rent a smartphone or mobile hotspot. Whatever option you choose you have to be prepared to either pay an exorbitant amount of money or go through an enormous hassle – sometimes both.

To put it simply, international data roaming is broken, and no U.S. carrier seems to be lifting a finger to fix it. They seem to prefer the miserable status quo to the headaches required to repair the system. But where the network operators are falling down, mobile virtual network operators (MVNOs) are picking up the slack.

As its name implies, an MVNO doesn’t have a network of its own. Instead they buy minutes and data capacity from traditional carriers, and resell them under their own brands and pricing plans. While most MVNOs tend to work in a single country with a single carrier, there’s nothing preventing them from buying capacity on multiple networks in multiple countries and then selling international access to a customer in a single pricing plan.

Companies like Tep Wireless and XCom Global are doing just that, renting out mobile hotspots to European-bound travellers that they can take across borders. Both will save you a lot of money if you’re a globetrotting heavy data user, but they’re by no means cheap, charging upwards of $15 a day if you opt for unlimited data packages.

London-based Voiamo, however, is thinking bigger with a new service called GlobalGig. Instead of just renting you a hotspot and selling you a temporary plan when you travel, it proposes to replace your current country-limited 3G or 4G modem plan with a service that will work in multiple countries with a single pricing plan. Its rates are a comparable to the prices most of the major carriers charge for hotspot plans — starting at $25 for 1 GB a month and up to $50 for 5 GB — but those rates are good for the U.S., the U.K. and Australia.

In the U.S., GlobalGig uses Sprint’s network, while in the U.K. and Australia it uses the 3 and Optus networks, but it is negotiating deals with carriers in other countries and plans to expand its global footprint soon, Voiamo CEO and founder Nigel Bramwell said. Its $120 hotspot — which can connect up to five devices through Wi-Fi — can support networks in 100 different countries, Bramwell said. As GlobalGig adds more carriers to its roster it will periodically send out new SIM cards to its customers, expanding their coverage to new countries.

If you’re an frequent international traveller, GlobalGig would be an ideal service especially if you already regularly use a mobile hotspot, but there are some limitations. The biggest is that the device can only access Sprint’s 1X and EV-DO networks. That means fairly slow data speeds compared to the LTE, HSPA+ and even WiMAX broadband service offered by other carriers. But Bramwell said GlobalGig’s next generation device will support all major global LTE networks. If that’s the case, the company will have something truly powerful on its hands: a 4G data service that knows no borders.

Voiamo may soon have some company in the global roaming market. Last month at a conference, Sprint MVNO Voyager Mobile revealed it has plans in the works to offer international voice and data plans, which charged the same rates whether home or abroad. Robert Gaal, the CEO of recently launched mobile broadband MVNO Karma, told me that his company might expand its social bandwidth model to other countries as well. Gaal, who is from and regularly visits the Netherlands, is increasingly frustrated with carrier roaming policies, said the only restriction to going international is finding inexpensive devices that support multiple 4G bands and technologies.